Ethical banking – a big opportunity for Britain’s retail banks, EIRIS survey reveals

New research commissioned by EIRIS, a leading global provider of research on corporate environmental, social, governance (ESG) and ethical performance, finds that nearly half (49%) of British adults agree that their bank should only lend to businesses that at the very least meet minimum ethical, social and environmental standards.

The national consumer survey was conducted by Ipsos MORI and explored attitudes to ethical, environmental and social considerations within banking amongst a sample of 2,002 online adults aged 16 – 75 in Great Britain.

Key findings:

  • 49% of people agree that their bank should only lend to businesses which at the very least meet minimum ethical, social and environmental standards. a
  • 39% of people say that they were influenced by their main bank’s approach to ethical, environmental and social issues to choose to bank with them. b
  • 29% of people are not aware that their main bank has an ethical, environmental or social policy that governed their lending, investment or insuring activities, but assumed that there would be one; 20% of people are aware of such a policy for their main bank. c
  • 33% of people agree that their bank should only lend to businesses that make a positive environmental or social contribution to society. d

What changes can retail banks make? Recommendations, based on the findings:

  • Adopt a lending policy that takes ethical, environmental, social or governance risks into account - 43% of people would trust their bank more if it had a lending policy that took ethical, environmental and social issues into account. e
  • Be transparent – 46% of people would trust their bank more if their bank made available to the public details of how their ethical, social or environmental lending policy works and the difference it makes in practice. f
  • Manage environmental, social and governance  risks for reputational reasons, among others - 43% of people would trust their bank less if there was media coverage of allegations that their bank’s lending may have breached ethical, social or environmental standards. g  
  • Survey your retail customers on what ethical issues matter to them within business banking – 38% would trust their bank more if it asked customers for their opinion on what ethical, social and environmental issues it should consider when banking with businesses. h

The results indicate that a significant proportion of people are concerned about environmental, social and ethical issues with regards to their bank’s activities. A sizeable number of adults are influenced by these considerations when choosing a bank, with 39% of people saying that their main bank’s approach to ethical, environmental and social issues had an influence on their choice of bank. These considerations continue to play a role in customer loyalty by affecting how far a significant proportion of adults trust a bank; for example, 46% of people say that they would trust their bank more if their bank made available to the public details of how their ethical, social or environmental lending policy works and the difference it makes in practice. The results of the survey indicate that there is substantial opportunity for retail banks to win untapped customers by being more transparent and by developing policies that manage environmental, social and ethical risks; 46% of people claim that they would trust their bank more if details of its ethical policy were made available to the public.

In light of recent events at the Co-operative Bank, the survey results come at a time of increased interest in ethical and responsible banking. Although ethical banks currently have a small market share, these findings indicate that there is plenty of market potential. There is need for greater consumer awareness of ethical finance offerings and the accompanying need for more and visible marketing by these banks. i

EIRIS provides robust, extra-financial research on corporate and fixed income performance on ESG grounds to institutional investors, including banks, for risk management purposes. EIRIS has also developed a free, online, independent consumer resource, YourEthicalMoney, which can help consumers begin to explore green and ethical concerns. It has a section analysing prominent UK high street banks on a set of green and ethical criteria; it provides template letters to help consumers contact their bank with questions, and it also provides a searchable directory of IFAs that can advise on green and ethical finance.

Stephen Hine, Head of Responsible Investment Development at EIRIS commented, “The finding that 49% of people agree that their bank should only lend to businesses which at the very least meet minimum ethical, social and environmental standards, demonstrates that there’s a clear opportunity for retail banks to gain consumer business by leading the way with policies that consider ESG risks and by being transparent about their operations.”  He continued, “For both reasons of reputation and as a business opportunity to attract and retain clients, all retail banks should address ESG issues in lending, insuring and investment activities. Lack of trust and confidence is a problem for all banks, including ethical ones, and these findings demonstrate ways that this can be addressed.”

Click here for a pdf copy of this press release.

 

Press contact:

London

Stephen Hine |  [email protected] | +44(0)207 840 5716

Notes to editors:

  • The National Online Consumer Survey was conducted by Ipsos MORI on behalf of the social enterprise and responsible investment research firm EIRIS, to gauge attitudes to ethical banking amongst the British public. An online sample of 2,002 British adults between 16 and 75 years were interviewed across England, Scotland and Wales. Fieldwork took place between 22nd and 27th November 2013. Data has been weighted to known population figures for Great Britain.
  • Key findings:

a)     49% of people agree that their bank should only lend to businesses which at the very least meet minimum ethical, social and environmental standards (12% disagree, 8% don’t know, 31% neither agree nor disagree).

b)    39% of people are influenced by their main bank’s approach to ethical, environmental and social issues to choose to bank with them (47% are not at all influenced, 15% don’t know).

c)    29% of people are not aware that their main bank had an ethical, environmental or social policy that governed their lending, investment or insuring activities, but assumed that there would be one; 20% of people are aware of such a policy for their main bank. (15% don’t know; all aware 20%; all not aware 65%).

d)    33% of people agree that their bank should only lend to businesses that make a positive environmental or social contribution to society (19% disagree, 9% don’t know, 40% neither agree nor disagree).

e)    If their bank had a lending policy that took ethical, environmental and social issues into account, 43% of people say that they would trust their bank more; 2% would trust it less; 13% don’t know; 42% of people say it would make no difference.

f)   If their bank made available to the public details of how their ethical, social or environmental lending policy works and the difference it makes in practice 46% of people say that they would trust their bank more; 2% say that they would trust it less; 12% don’t know; 40% say it would make no difference.

g)   If there was media coverage of allegations that their bank’s lending may have breached ethical, social or environmental standards 43% of people say that they would trust their bank less; 9% say that they would trust it more; 14% don’t know; 34% say it would make no difference.

h)  If their bank asked customers for their opinion on what ethical, social and environmental issues it should consider when banking with businesses 38% say that they would trust their bank more; 3% would trust it less; 13% don’t know; 46% say it would make no difference.

i)     EIRIS has carried out surveys in the past exploring the gap between behaviour and action. For example in late 2009, Ipsos MORI conducted a National Online Consumer Survey of 1,037 adults aged 16-64 on behalf of EIRIS, to gauge current interest in green and ethical finance among British consumers; explore post credit-crunch attitudes to ethical finance; and identify current barriers to investing. This survey found that 44% of the British public were interested in finding out about the ethical credentials of the next financial product or service that they bought. Three-quarters of those interested also said they were likely to take this into consideration when next buying a financial product or service. However, the survey also explored what was hindering translation of interest into action. Key barriers were found to be lack of knowledge and mistrust of products. There also appeared to be a lack of awareness of current products and services, including among key groups. Click here to read 2009 survey results.

  • EIRIS is a leading global provider of independent responsible investment research. EIRIS’ responsible investment services are used by more than 200 clients, including asset owners, asset managers, banks, stock brokers, governments and charities from across Europe, North America, Australia and Asia. We also work with index providers around the world including the Borsa Istanbul in Turkey, the Johannesburg Stock Exchange in South Africa and the Bolsa Mexicana de Valores in Mexico.   Our sector-based research teams provide in-depth coverage of around 3,500 companies globally, covering over 110 different environment, social and governance areas. In addition to our offices in London, Paris, Boston and Washington, D.C., our global network of partners enables us to further extend our research coverage. The EIRIS global platform includes partners in Australia, Israel, Germany, Mexico, Spain, South Africa and South Korea. For further information, please visit www.eiris.org.
  • In September 2013, EIRIS launched the EIRIS Global Platform, an innovative and intuitive research platform for sustainability data.
  • EIRIS’ free, online, independent resource Your Ethical Money, www.yourethicalmoney.org, is for those consumers that are beginning to explore green and ethical finance. The resource addresses green and ethical concerns related to areas of finance including banking, investments, insurance and credit cards. Users can search for their bank or building society, as well as their insurance, credit card or mortgage provider, to find out how it measures up against a set of specially developed green and ethical criteria. Users can also search for investment products that match their green and ethical concerns. The site features guides on financial exclusion and green wash in financial product marketing. Information on the banking section of the website was updated in autumn 2013 based on publicly available information. Please note EIRIS is not authorised to provide financial advice.

  

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